CQ WEEKLY – COVER STORY May 5, 2012 – 2:08 p.m.

Prosecutions Gone Bad: How Should Congress React?

By Amanda Becker, CQ Staff

In mid-March, the judge who presided over the trial of the late Ted Stevens unsealed a special counsel’s report describing in extraordinary detail how prosecutors systematically and intentionally concealed evidence that might have exonerated the Republican senator from Alaska.

BEFORE THE TROUBLE: Friedrich, head of the department's criminal division, announces the Stevens indictment at a Washington news conference in July 2008. (SUSAN WALSH / AP )

It was one of a number of recent federal cases tainted by misconduct. Several high-profile prosecutions, including the government’s first conviction of a corporation using an anti-bribery statute and one of the largest stock-backdating probes to date, have been upended when such behavior has come to light.

But until they saw the Stevens report, few in Congress took notice of those cases, or of scores of similar ones involving low-profile or no-profile individuals, or of the persistence of the problem of evidence concealment. Indeed, a leading scholar in the field, American University Law School Professor Cynthia E. Jones, calls it an “epidemic” of prosecutorial violations.

And though it’s raising awareness among prosecutors and judges alike, no certain fix seems anywhere in sight.

The special counsel’s 525-page tome is unprecedented for the inside glimpse it provides of a major, albeit botched, Justice Department case — a case in which reputations were at stake not only for a sitting U.S. senator, but for officials up and down the chain of command.

The document relates how personal resentments and bureaucratic politics led to mismanagement and ultimately to miscarriage.

Stevens, the longest-serving Republican senator in history, was convicted in October 2008 of seven felony counts for failing to disclose the value of outstanding bills for repairs to his Alaska home. Days later he was defeated in his re-election bid by Democrat Mark Begich, months before the concealment of evidence came to light and his case was dismissed. He died in the crash of a single-engine plane Aug. 9, 2010.

The day the report was unsealed, Alaska Republican Sen. Lisa Murkowski introduced bipartisan legislation designed to reinforce the government’s court-established obligation to share information in its possession that is favorable to the defense.

The bill immediately won endorsements from a broad variety of interest groups, each with its own grievance against the Justice Department.

The president of the American Bar Association complained of “wildly different policies” about disclosure of evidence among U.S. attorneys across the country, with some of them “virtually never” producing the information they are supposed to provide defendants.

The U.S. Chamber of Commerce, for its part, complained bitterly about the guilty verdicts the Justice Department obtained under the Foreign Corrupt Practices Act against Lindsey Manufacturing, a California-based company that offers products and consulting services to electric utilities, and two of its executives for bribery of Mexican officials. The convictions were dismissed in December after a federal judge determined that the government had “recklessly failed to comply” with its obligations to reveal evidence favorable to the defense.

The American Constitution Project, a civil liberties group, endorsed Murkowski’s bill and released a letter signed by 112 former judges, prosecutors, law enforcement officers and defense lawyers, citing a list of recent federal cases in which the defense “eventually discovered undisclosed evidence that was constitutionally required to have been disclosed.” The letter referred to a USA Today investigation in 2010 that identified 201 cases in which judges had determined that prosecutors had broken laws or ethics rules in federal criminal cases dating back to 1997.

Prosecutions Gone Bad: How Should Congress React?

“We have concluded,” the letter said, that violations “have occurred for too long and with sufficient frequency that Congress must act. Self-regulation by the DOJ has been tried and has failed. It is ultimately not a solution to the injustices that continue to occur.”

Although newspaper exposés and the defense bar have for years called foul when federal prosecutors failed to live up to their duties to disclose evidence, there is some skepticism that Murkowski’s proposal would level the playing field.

But the release of the Stevens report has pushed the issue into the spotlight, where Congress can see it.

Stevens’ former colleagues acknowledged in a March 28 Senate Judiciary Committee hearing on the report that it seems the victimization of one of their own has helped concentrate their minds.

“This was a high-profile case involving a United States senator, one of our colleagues,” said Illinois Democrat Richard J. Durbin. Said Democrat Patrick J. Leahy of Vermont, chairman of the Judiciary Committee: “The sloppiness, mistakes and poor decisions in connection with the Stevens case disturbed the judge hearing the case. But it also disturbed me. I might also say that it disturbs an awful lot of the senators on both sides of the aisle.”

The Justice Department’s critics — including some in the Senate — have not been mollified by its response.

When the Stevens case fell apart, the department moved quickly to re-examine its policies but kept the effort internal. New “rigorous enhanced training efforts” were implemented that included a boot camp for new prosecutors.

Three new memos on discovery issues in criminal cases were sent to all of the department’s prosecutors, a spokesman said.

“The problem is that those memos are not enforceable in court,” said Peter Zeidenberg, a lawyer with DLA Piper.

The most definitive step the Justice Department has taken to curb prosecutorial misconduct occurred last year when Attorney General Eric H. Holder Jr. announced that he was establishing a new Professional Misconduct Review Unit following the USA Today series.

The Murkowski bill is unnecessary, the department said, because “in light of these internal reforms, the department does not believe that legislation is needed to address the problems that came to light in the Stevens prosecution.”

Prosecutions Gone Bad: How Should Congress React?

The Murkowski bill, in fact, is one thing on which both the Justice Department and some of its critics agree.

Neither thinks it’s a good idea — the department, because it has already implemented its own internal controls; its critics, because they believe the proposed legislation does not go far enough.

Stevens was indicted in July 2008, five years into a multipronged, large-scale probe of Alaskan political corruption known as the Polar Pen investigation.

By the time of his indictment, there had been seven criminal convictions, including three of former members of the Alaska House of Representatives, as a result of a collaborative effort by the IRS, the FBI and the Justice Department to identify and prosecute fraud in the nation’s northernmost state.

The government alleged that between May 1999 and August 2007, Stevens had allowed an Alaskan-based oil pipeline service and construction company, which was then known as VECO Corp., to perform roughly $250,000 worth of repairs and renovations on his home in Girdwood, Alaska. The services, government prosecutors said, were never paid for, nor were they disclosed on the annual financial disclosure forms that Stevens filed with the Senate.

In the hope that his name could be cleared before the November election, Stevens’ legal team pushed for a fall trial date and the government agreed.

Instead, a jury convicted Stevens of seven felony counts for lying on his disclosure forms.

Just eight days later, then-Anchorage mayor Begich defeated Stevens by about 4,000 votes.

Judge Emmet G. Sullivan, who had presided over Stevens’ trial, found out some months later that some of the prosecutors handling the case had never disclosed that an FBI agent involved in the investigation had accused them of misconduct. Sullivan held two of the government’s attorneys in contempt, and the Justice Department assigned new prosecutors to the case.

In April 2009, the department told Sullivan that it had uncovered significant information that had never been shared with the defense and asked that Stevens’ guilty verdict be set aside. Sullivan agreed.

At the same time, Sullivan appointed Henry F. Schuelke III, a former federal prosecutor who is now in private practice, to investigate whether the six government attorneys who handled the case should be prosecuted for their own misconduct — a decision that Stevens’ attorneys applauded, citing the “stunning” miscarriage of justice.

“This case is a sad story and a warning to everyone. Any citizen can be convicted if prosecutors are hell-bent on ignoring the Constitution and willing to present false evidence,” Stevens’ attorneys at the law firm Williams & Conolly said at the time.

How to Flub a Case

Prosecutions Gone Bad: How Should Congress React?

NOT GUILTY: Stevens entered a plea in Washington in July 2008. The charges revolved around improvements to his Alaska homes. ( J. SCOTT APPLEWHITE / AP)

After a two-year investigation that involved the review of 128,000 pages of documents and the depositions of those involved in the Stevens investigation, Schuelke delivered the report March 15.

It could be a law school case study on how not to manage a high-profile, high-stakes prosecution of public corruption.

The problems began shortly before Stevens’ indictment when the assistant attorney general then in charge of the Justice Department’s Criminal Division, Matthew Friedrich, decided that Brenda Morris, an attorney who had until that point been only tangentially involved with the investigation, would head the trial team. The head of the department’s Public Integrity Section, William Welch, disagreed.

Schuelke’s report does not delve into the reasons for Brenda Morris’ appointment — including whether it was a race-related play, familiar to lawyers on both sides in District of Columbia cases, to curry favor with a jury by having an African-American woman prosecute the case.

It does detail how her last-minute substitution helped derail the Stevens case.

“That decision essentially caused me to spend much, much more time than I wanted dealing with maintaining the chemistry of the team. At various times, decisions would get made by upper management that had a very negative impact on the morale of the team,” Welch told Schuelke.

The attorneys who thought they would be handling the trial — Nicholas Marsh, James Goeke, Edward Sullivan and Joseph Bottini — felt slighted. In email messages, Morris attempted, to no avail, to smooth things over with the men who would be her second and third chairs at trial.

“The guys were telling me they were refusing to go to the press conference,” Morris told Schuelke of the day her appointment was announced. “They all expressed it in different ways . . . Nick was just livid. I mean he wouldn’t look at me or just look at me like he was seething.”

It was a “horrible, horrible, horrible experience” from the moment she was assigned to the case after declining the first three requests, Morris testified.

The disgruntled attorneys responded by distancing themselves from trial preparation, according to the report, assigning document-review duties to FBI and IRS agents who were untrained for the process and left largely unsupervised.

Morris told Schuelke that she did not know who was in charge of supervising the agents. Nor was the overall chain of command clear.

“Clearly this isn’t viewed as the average case. I do want to stay in front of the issue by informing the front office of some of our decisions,” Morris wrote in an email to Marsh that was cited in Schuelke’s report.

Prosecutions Gone Bad: How Should Congress React?

The confusion caused crucial information that could have corroborated Stevens’ defense — and that the government prosecutors were required to share — to be withheld from the senator’s legal team.

“It was sort of a recipe for disaster the way things unfolded,” Zeidenberg said. “When anything goes that badly awry, it’s never just one thing. There were a series of mistakes, and it had a cascading effect.”

Stevens built his defense at trial on two notes he had sent to friend and VECO executive Bill Allen regarding the repairs on the Girdwood home. The handwritten notes asked for bills for the repairs and referenced a former senator, Robert Torricelli of New Jersey.

Torricelli was “severely admonished” by the Senate Ethics Committee in 2002 for improperly accepting expensive gifts from a former campaign supporter.

‘Remember Torricelli’

“Thanks for all the work on the chalet,” Stevens wrote to Allen in October 2002. “You owe me a bill — remember Torricelli, my friend. Friendship is one thing — compliance with these ethics rules entirely different.”

“Many thanks for all you’ve done to make our lives easier and our home more enjoyable. . . . (Don’t forget we need a bill for what’s been done out at the chalet),” he wrote the next month.

Early in the trial, Stevens’ attorney told the jury that the two exchanges, known as the Torricelli notes, were the kind of evidence that “jumps off the page and grabs you by the throat to show you what the intent of Ted Stevens was.”

Email and memorandums reviewed by Schuelke show that the government was aware this would be the senator’s main line of defense. Even so, at multiple junctures, it withheld information that could have corroborated Stevens’ story, according to the report.

A contractor named Rocky Williams, for example, told government agents and attorneys that he had the same understanding as Stevens — that although the bills were outstanding, they would be paid.

None of the government’s notes of those interviews, however, were ever shared with Stevens, Schuelke found. A memo summarizing the exchanges did not reveal that Williams had confirmed the senator’s account. After Williams performed poorly during a mock cross-examination, prosecutors concluded that his deteriorating health rendered him unable to testify and put him on a plane back to Alaska the day the trial began, without informing the judge or Stevens’ defense team.

Nor did the government share information about Allen that could have cast doubt on a last-minute change of heart concerning the Torricelli memos that proved disastrous to Stevens’ contention that he intended to pay for the repairs, Schuelke found.

Allen initially told government prosecutors that he did not remember discussing the handwritten exchanges with a mutual friend supervising the renovations on the Girdwood house. At trial, however, Allen testified that he told the same individual “don’t worry about getting a bill. Ted is just covering his ass.”

Prosecutions Gone Bad: How Should Congress React?

Stevens’ attorney was shocked — none of the interview notes government prosecutors had given him before the trial indicated that Allen had changed his mind.

Government prosecutors also never disclosed that Allen told them that the value of the work in question was about $80,000, not $250,000 as alleged.

The prosecution team’s “collective memory failure” about Allen changing his testimony “strains credulity,” Schuelke wrote in the report, which was delivered to Judge Sullivan in November.

Although Schuelke found evidence that two of the prosecutors — Bottini and Goeke — had willfully and intentionally withheld evidence, he concluded that they could not be prosecuted because Sullivan simply had told them to “follow the law,” and in the absence of more explicit instructions about disclosure it would be difficult, if not impossible, to bring a successful criminal prosecution.

When Schuelke’s report was unsealed, it became a rallying cry to examine how a successful case could not be brought against attorneys who, by Schuelke’s estimation, so clearly violated the spirit of the law.

Hard but Not Foul

The duty to disclose exculpatory evidence is grounded in the concept of the federal prosecutor as the representative of the government, committed not to winning cases but to seeing that justice is done.

The federal prosecutor, the Supreme Court said in the 1935 case of Berger v. United States, “may prosecute with earnestness and vigor — indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones.”

Two later Supreme Court cases established the idea that prosecutors must disclose evidence that might prove the innocence of criminal defendants, reduce their sentences or enable their attorneys to question the credibility of a government witness, even though it does not help the government’s case to do so.

In the 1963 case Brady v. Maryland, the justices found that defendant John Brady’s constitutional rights had been violated when prosecutors failed to reveal that his accomplice had confessed to the killing for which Brady had been convicted.

Today, prosecutors conduct what is known as a Brady review to identify such exculpatory or impeachment information and share it with the defense.

Nearly a decade later, in Giglio v. United States, the court extended that standard to include any agreement that government prosecutors make with a witness. In that case, John Giglio received a new trial because he was unaware that a witness testifying against him would not be prosecuted for his role as an accomplice.

The Federal Rules of Criminal Procedure make it the duty of a prosecutor to share at the defendant’s request any information “material to the preparation of his defense.”

Prosecutions Gone Bad: How Should Congress React?

About a third of the federal courts have local rules that expand on that obligation or impose a time requirement for when prosecutors must hand over the information. But prosecutors don’t always follow the rules, as the report on the Stevens case demonstrated.

The legislative effort to address the issue focuses largely on clarifying government duties that already exist. Murkowski’s proposal would, if passed, add to the United States Code a section on the government’s obligation to disclose information that includes “data, documents, evidence or objects that may reasonably appear to be favorable to the defendant” in determining guilt or sentence. Such material must be provided “as soon as reasonably practicable,” according to the bill’s language.

In addition to codifying prosecutors’ responsibilities, the bill also describes “remedies” if the government does not meet its duty, including holding a new trial or the overturning of any verdict obtained — remedies that are already available to judges.

Some legal observers wonder whether the legislation in its current form wouldn’t simply reiterate and build on a system of sharing evidence that doesn’t seem to work.

“To say that the system is imperfect doesn’t begin to describe it,” DLA Piper’s Zeidenberg said.

Disbarment Rare

The Supreme Court has said federal prosecutors cannot be sued for their misconduct.

Although state regulators since 1998 have had the authority to suspend or disbar Justice Department attorneys who violate laws and ethics rules, the USA Today investigation found only six who had been disciplined for their actions, and of those only two had licenses suspended.

When the District of Columbia Court of Appeals disbarred former assistant U.S. attorney G. Paul Howes last year for his “egregious” misconduct in a series of murder trials in the 1990s, for example, it was the first time the court had done so and the only example of a current or former federal prosecutor facing such a sanction during the past decade.

Legal experts say cases such as the one the Justice Department built against Stevens are particularly vulnerable to discovery-related misconduct.

“Discovery issues in violent crimes are much less complicated: The case starts at the time of the robbery or the shooting, there is no pre-existing paperwork, there are police reports, ballistic reports, witness statements, a medical examiner’s report,” Zeidenberg said.

“It’s entirely different when you’re doing a white-collar case that’s been going on for years and you’ve subpoenaed bank records, you’ve gone through years of financial information and tax returns, you’ve gone through this person’s life,” Zeidenberg added.

An inherent conflict exists in the way prosecutors share evidence with defendants, and it is exacerbated when the stakes are high, critics of the system say.

Prosecutions Gone Bad: How Should Congress React?

The government had a lot on the line when it prosecuted Lindsey Manufacturing and two of its executives. In December, the conviction was overturned when the judge found that prosecutors had engaged in “flagrant” misconduct by allowing an FBI agent to provide false testimony.

In another high-profile case, the charges against two executives of the Irvine, Calif.-based company Broadcom were thrown out by a judge in 2009 when he found that prosecutors had engaged in a “shameful” campaign to intimidate witnesses in what was then the largest stock options backdating case brought by the federal government.

Calling Their Own Fouls

One of Stevens' Alaska homes (AP)

The federal criminal justice system relies on prosecutors — the very people who have a vested interest in making sure the defendant ends up behind bars — to make crucial judgments calls on what information could potentially help the defense team.

“The problem is that you allow the prosecutor to determine what is exculpatory, and in their zeal to win cases they either overlook or intentionally hide evidence that will hurt their case. That was the problem in Stevens, that was the problem in Broadcom,” said Skadden Arps Slate Meagher & Flom partner Richard Marmaro, who represented Broadcom Chief Financial Officer William J. Ruehle.

“It’s like asking a basketball team to call fouls for both teams when both teams want to win,” Zeidenberg said.

Absent a case in the pipeline that could open the door for the Supreme Court to further clarify its decisions in Brady and Giglio, much of the effort to ameliorate the problem has fallen to the Federal Judicial Center, the education and research arm of the federal court system.

When the center examined in 2007 whether prosecutors should share all exculpatory or impeachment information, not just that which is material — that is, relevant — to a defendant’s guilt or innocence, as currently stated, the Justice Department intervened, arguing that the issue was best handled internally by issuing new guidance and establishing new training protocols, not by rewriting the rules or passing a law.

In addition to concerns the department has about the specifics of the Murkowski proposal, it says it has already gone above and beyond taking new precautions regarding the handling of evidence in the wake of the Stevens case.

A position was created to oversee the Justice Department’s discovery obligations on a national level. Its attorneys are now required to attend annual trainings regarding case evidence. Its internal policies regarding sharing exculpatory evidence go beyond what is required by the Constitution, an attorney with the department said.

The pre-existing Office of Professional Responsibility will, going forward, refer evidence of misconduct to the newly created unit within the Justice Department, which will determine appropriate sanctions. Given the infancy of the new system, its efficacy is unclear.

“While the Department meets its discovery obligations in nearly all cases, even one failure is one too many,” a spokesman said in a prepared statement. “But it would be an injustice of a different kind for the thousands of men and women who spend their lives fighting to uphold the law . .. to be tainted by the notion that instances of intentional prosecutorial misconduct are anything but rare occurrences.”

Prosecutions Gone Bad: How Should Congress React?

But critics say it’s not enough to rely on DOJ to punish its own; a better system would be implementing a remedy less open for interpretation, such as mandatory sanctions depending on the level of misconduct.

“As a former prosecutor, I would say the mandatory sanctions for violations by the prosecution is a more effective tool than simply changing the rule that will have no consequences if violated,” a defense attorney told the Federal Judicial Center in response to a survey.

“The legislation that’s been proposed is a step in the right direction, but it would’ve been better if it did two things,” American University’s Jones said, suggesting more definitive timing requirements and “very clear sanctions.”

“The major problem with the Brady landscape is that there’s really no sanction or adverse ramification if the prosecutor does not turn it over. The normal remedy is disclosure — you’re ordering them to do the same thing they’re already required to do,” she said.

A codification of Brady obligations that might have more traction is one that would push the federal courts to adopt a system of “open file” discovery, some attorneys say.

In such a scenario, the onus of determining what evidence might help a defendant is removed from prosecutors because all of the evidence the government has is shared with the defense. Although this process already exists in some states, it has not yet reached the federal court system.

“When you go to a system of open-trial discovery, the prosecutor doesn’t have to worry about whether a piece of evidence has to be disclosed,” Marmaro said.

But open-file discovery has its critics — and not just the government. Defense attorneys point out that the process creates more work, which can bury overworked trial teams that must already sift through thousands if not millions of pages of documents. The system would likewise still rely on prosecutors to meet their ethical obligation to hand over all the evidence and not intentionally withhold any helpful information. One possible remedy is to pair the system with strengthened or mandatory sanctions, experts say.

Whether it’s mandatory sanctions, cementing the government’s existing responsibility in a formal rule or law, or expanding that responsibility by changing the discovery process, the Stevens case has put a spotlight on Brady reform at a time when high-profile prosecutions of current and former public officials have created a tenor of unease on Capitol Hill.

“The benefit of the Schuelke report is that it brings the discussion to everyone’s attention,” Marmaro said.

“While all criminal cases should be handled with the utmost professionalism, cases of this level of importance . . . where elections can be swayed, should be shining examples of the best of the Justice Department,” Grassley said.

It’s “a great tragedy” that Stevens never knew the results of Schuelke’s report before his death, Democratic Sen. Dianne Feinstein of California told Schuelke.n